Being half-Singaporean and living in Dubai, I find it particularly interesting to follow the growing developments between Asia and the UAE. Recent statistics show that almost half of the Emirate's total trade is with Asia and there is plenty of evidence reflecting how the two regions are trying to deepen their ties further. What is less publicized, however, are the business opportunities that are being created for Asian businesses and business owners here in the UAE as a result of these enhanced relations.
To begin with, let me give you a quick introduction into the Belt and Road Initiative (BRI). The BRI is a development strategy initiated by the Chinese Government aiming to enhance regional connectivity by improving infrastructure across land (belt) and maritime (road) corridors across Asia, Africa and Europe. It is worth noting that the UAE has been one of the first proponents of the BRI, coming as no surprise considering the long-standing history between both nations.
Given the UAE's location at the heart of the intra-Asia trade corridor in-between Asia and Africa, the UAE and China are, apart from strong international allies, very well-established trading partners. In recent years, in part due to the BRI, trade between the UAE and China has accelerated at a rapid rate of 17% from 2017 – 2018, a figure which is expected to double over the next decade. In numeric terms, this translates to $53.3 billion worth of non-oil foreign trade between both nations in 2017, forecast to rise to $70 billion by 2020.
One of the major catalysts for this growth has been the UAE's close proximity and increasing connectivity with Africa. You can now fly to 19 African destinations direct on Emirates airline from Dubai International Airport making Dubai the most well-connected capital-rich country in the region. With a fast-growing population and consistent economic growth, Africa presents an untapped resource in an increasingly volatile global economy. Africa's current population of 1.2 billion is projected to reach 1.7 billion by 2030 and its real GDP grew at an aggregate annual rate of 5.4% from 2000-2010, slowing slightly in recent years from the shocks of the Arab Spring and falling oil prices.
It is for this reason that the Dubai Chamber has been very active in supporting Dubai-based companies looking to do business in Africa. With offices in Ethiopia, Ghana, Mozambique and Kenya the Dubai Chamber organizes regular trade missions to Africa. The Chamber also provides facilities on the ground to ensure a smooth market entry for Dubai-based companies looking to do business on the continent.
It is statistics like these that have also attracted immense investment from China. In September of 2018, President Xi Jinping announced that China will provide $60 billion in financial support and investment to Africa. As more and more Chinese companies look to capitalize on opportunities in both the Middle East and Africa, the UAE continues to feature as the regional hub of choice. In fact, the UAE was recently ranked third place in a global index of nations that stand to benefit the most from the BRI. This can be attributed to, not only its strategic location, but also its secure and well-regulated economy with abundant structuring solutions and access to trade finance.
Evidence is already beginning to show. The latest estimates suggest that the UAE is now home to over 4,000 Chinese businesses ranging from SME's to Multinationals with more than 200,000 Chinese citizens permanently residing here. If you look around the construction sites scattered around Dubai, you will see an increasing number of Chinese firms being listed as key contractors in the projects, something which was not a regular occurrence even a few short years ago.
Similarly, Dubai's Jebel Ali Port, the largest marine terminal in the Middle East, also stands to benefit from its position as one of the primary transshipment centers' in China's maritime corridors. Recent numbers show that there are currently more than 230 Chinese companiesbased in Jebel Ali Free Zone (JAFZA) increasing from only 64 back in 2007.
The UAE has not only attracted companies involved in trade and construction but also financial services. The Dubai International Financial Centre (DIFC) is consistently recognized as the leading financial centre covering the Middle Eastern, African and South Asian markets. Consequently, this is where China's four largest banks in terms of assets (Bank of China, Agricultural Bank of China (ABC), Industrial and Commercial Bank of China and China Construction Bank Corporation) have chosen to setup their base for regional operations.
Outside of trade, construction and finance, the UAE government has identified clean energy, transportation, education, healthcare, water, technology and space as key sectors for development. These sectors are deemed critical for the UAE to meet its Vision 2021 goal of becoming a competitive knowledge-based economy that is free from a dependence on oil and I know for a fact that the country's leadership is committed to providing the best operating environment for businesses to thrive.
To conclude, there are countless opportunities for businesses looking to exploit the increasing trade between Asia and the UAE. And with the introduction of the BRI, these numbers are only set to rise. Whether you are looking for a more favorable tax regime, exploring new markets for trade, or simply looking for a new hub for your businesses operations, the UAE unquestionably should be an option that you explore.
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